In August 1965, in the first few days after the rebellion in the Watts neighborhood of South Central Los Angeles, while the last fires still smoldered, a reporter interviewed two Black teenagers about why the riots had happened. “We live in a two-bedroom apartment,” one of them said. “The rent is too high and rats, they are big. You open the back door and one of them jumps over your foot from the back porch. But we still have to live here.”

For decades, federal officials had relied on public housing to shelter poor and low-income people. But by the end of the 1960s, public housing had become politically untenable, with endless jousts over its maintenance, location, and inhabitants. Housing for the poor suffered from a mixture of government neglect and shrinking tenancy, a result of the horrific conditions endured by residents and the constant pressure for such housing to exclude anyone other than the poorest residents. The HUD Act changed this by creating a system by which poor and low-income people could supposedly purchase their own homes.

Federal officials turned to private property, hoping for a cheaper program with smaller outlays and the social stability that they claimed would come with property ownership. As with any partnership, the private sector had its own expectations, including the infusion of subsidies and federal mortgage guarantees in a moment of uncertainty within the housing market. Private sector actors welcomed the pioneering role of HUD and the Federal Housing Administration in forging a risk-free venture in the new urban housing market.

Placing homeownership at the heart of the nation’s low-income housing policies ceded outsize influence and control to the real estate industry over dwellings intended to serve a disproportionately African American market. Real estate’s wealth was largely generated through racial discrimination. Its profitability was contingent on “best practices” that actively encouraged racial segregation, and the public policies that grew from the partnership between property assessors, brokers, bankers, and federal policymakers reflected the logic of the housing market. Even when the policies were in response to prolonged social protest, as was the case in the 1960s, the outcomes still reflected terms that were favorable to private sector actors.

Those terms were often inescapable. As the Philadelphia Inquirer described it at the time, “Most of these families . . . really wanted to rent, rather than buy, but they were given limited choices. Most are black or Puerto Rican. Many are women — separated, divorced or widowed — who are raising their children alone.” Many were coerced into a purchase. Francetta Jenkins, a 26-year-old mother of three from Philadelphia, complained that she was “looking for a house to rent” when she ended up buying a house for $4,330 instead. Even though the house was in rough shape, she was assured that it was “FHA-approved” and that she “didn’t have anything to worry about.” Ralph Rivera was also “looking to rent.” “I went to the real estate man thinking he has houses to rent and he said, ‘I don’t rent, I sell.’”

Blaming the poor served a purpose. HUD officials desperately wanted to keep the narrative from becoming one of federal officials signing off on criminally defective houses — a task made much easier by the fact that the story of negligent and lazy poor people failing to perform basic maintenance was so readily available. Where the story of poor Black people as willing culprits would not fit, the description of them as overwhelmed and ignorant and devoid of common sense was pursued instead. In testimony before a congressional hearing, Romney was asked about a case in Newark in which the buyer, like so many others, had been duped by a shady real estate speculator. Romney cut off the questioner and blurted out, “You know, Mr. Congressman, it is amazing what goes on. Some of these people . . . some of these people that buy homes never go in to inspect the home. . . . I just can’t personally understand how people in all aspects of this situation could be doing what they have [been] doing. You wouldn’t think of buying a home without going in and looking at it.”

Perhaps the first indication that HUD’s issues with real estate speculation and fraud went far beyond local hustlers and “suede-shoe” swindlers came with federal charges against the powerful Dun & Bradstreet credit agency in New York City. In 1972, the agency was charged with twenty-four counts of bribery, fraud, and conspiracy. According to a UPI report, Dun & Bradstreet played a critical role in an expansive plot to sell “depressed-area homes by real estate speculators to low-income blacks and Puerto Ricans,” with the hope that they would default on their loans quickly. After a few months, when a homeowner fell into foreclosure, it was not uncommon for the same house to be quickly resold under the same dubious terms to another unsuspecting family. In total, forty individuals — including seven FHA employees and a public official — and ten corporations were indicted for bribery and fraud involving foreclosures of 2,500 homes, which cost the FHA insurance fund $200 million.

The Dun & Bradstreet scheme worked in a fashion similar to housing fraud scams in other cities: in order to secure a large loan for purchase of a property with an inflated price, a speculator convinced a prospective homeowner to sign a blank credit report, which was then taken to a mortgage bank. A mortgage banker in on the conspiracy would take the blank report to the people at Dun & Bradstreet, who would give the homeowner a favorable credit report that allowed for an even larger loan. The mortgage company would then pay off an FHA employee to inflate the value of a property for sale and confirm its good condition. If a house were to be found in obvious disrepair, a crooked contractor would sign false papers claiming repairs had been made. The intricacy of the fraud resulted in a five-hundred-count indictment against multiple parties across the New York housing industry. As a result, HUD suspended the eighty-seven offices of Dun & Bradstreet from doing any further business with the agency for an undisclosed period of time. The federal prosecutor Anthony Accetta understood the long-term effects of this fraud: “I don’t see how anyone who is Black or Puerto Rican could have faith in the white system after being shaken down like this and then losing his house two months later.”